Correlation Between Alam Sutera and Sentul City

Can any of the company-specific risk be diversified away by investing in both Alam Sutera and Sentul City at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alam Sutera and Sentul City into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alam Sutera Realty and Sentul City Tbk, you can compare the effects of market volatilities on Alam Sutera and Sentul City and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alam Sutera with a short position of Sentul City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alam Sutera and Sentul City.

Diversification Opportunities for Alam Sutera and Sentul City

0.81

Correlation Coefficient

Alam Sutera  Sentul City

Very poor diversification

The 3 months correlation between Alam and Sentul is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alam Sutera Realty and Sentul City Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentul City Tbk and Alam Sutera is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alam Sutera Realty are associated (or correlated) with Sentul City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentul City Tbk has no effect on the direction of Alam Sutera i.e., Alam Sutera and Sentul City go up and down completely randomly.

Pair Corralation between Alam Sutera and Sentul City

Assuming the 90 days trading horizon Alam Sutera Realty is expected to generate 0.46 times more return on investment than Sentul City. However, Alam Sutera Realty is 2.16 times less risky than Sentul City. It trades about -0.19 of its potential returns per unit of risk. Sentul City Tbk is currently generating about -0.29 per unit of risk. If you would invest  13,700  in Alam Sutera Realty on March 21, 2024 and sell it today you would lose (600.00) from holding Alam Sutera Realty or give up 4.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Alam Sutera Realty  vs.  Sentul City Tbk

Alam Sutera Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alam Sutera Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sentul City Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentul City Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Alam Sutera and Sentul City

The main advantage of trading using opposite Alam Sutera and Sentul City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alam Sutera position performs unexpectedly, Sentul City can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sentul City will offset losses from the drop in Sentul City's long position.

The idea behind Alam Sutera Realty and Sentul City Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.